'Big Short' Burry Doubles Down: Nvidia, Palantir Short Positions Double in Big Bet on AI Bubble Bursting

TradingKey - As the Nasdaq continues to reach consecutive all-time highs, Michael Burry—the real-life inspiration for the film 'The Big Short' who rose to fame during the 2008 subprime mortgage crisis—is betting on the bursting of the AI bubble with unprecedented intensity.

Burry Further Ramps Up AI Short Positions

On May 10, Burry disclosed his latest portfolio adjustments in his Substack column 'Cassandra Unchained.' According to various disclosures, as much as 80% of Scion Asset Management's portfolio is allocated to Nvidia (NVDA.US) and Palantir (PLTR.US) put options.

The notional value of the underlying shares for these put positions is estimated at nearly $1.1 billion. Burry has doubled the size of his short position since first establishing it in the third quarter of last year.

Specifically, Burry holds put options on 1,000,000 shares of Nvidia with a strike price of $110 expiring in 2027; he also holds a dual-short structure on Palantir, including put options with a $100 strike price expiring in December 2026 and put options with a $50 strike price expiring in June 2027, while adding new direct short positions in Palantir.

Burry also expanded his bearish bets on the Semiconductor ETF (SOXX) , the Nasdaq 100 ETF (QQQ) and Oracle (ORCL) , with these positions totaling approximately 9.5% of his portfolio's total short exposure.

Burry issues another warning

Burry is basing his trading decisions on deep-seated concerns regarding market structure. Writing on Substack, he noted that listening to financial broadcasts during a long drive made him feel there was "no end to the discussion of AI," as a self-reinforcing narrative increasingly displaces fundamental analysis.

He drew a direct parallel between the recent accelerated ascent of the Philadelphia Semiconductor Index and the final melt-up preceding the March 2000 dot-com crash, stating bluntly that it feels like the final months of the 1999-2000 bubble.

He further noted that while Friday's consumer confidence index hit a record low, traders remained focused exclusively on non-farm payroll data that was only slightly better than expected, suggesting that market logic has completely decoupled from fundamentals.

Michael Burry’s History of Betting Against Bubbles

However, Burry's short position continues to face a significant test of time. As of May 8, NVIDIA shares closed at approximately $215, nearing its all-time high of $217.80, with a market capitalization surpassing $5.3 trillion; the $110 put options held by Burry currently remain deeply in the red with substantial floating losses.

In contrast, his short position on Palantir has generated returns. The stock has fallen from approximately $161 at the time Burry opened the position to about $137, representing a cumulative decline of roughly 34% from its 52-week high of $207.

Burry has not yet taken profits, as his assessment of Palantir's fair value ranges from "single digits to low double digits." He stated bluntly that he is "shorting the inherent unsustainability of its business model itself, rather than merely its valuation."

Historically, Burry has frequently endured immense pressure due to taking short positions prematurely. Before the 2008 subprime mortgage crisis, his short strategy also faced prolonged paper losses and market derision before eventually prevailing when the crisis hit. Whether this current bet against the AI bubble will follow the same path remains an open question.

Burry's "AI Bubble Hedge Portfolio"

While holding significant AI short positions, Burry has begun buying traditional software stocks that were "scared off" by the AI narrative, including Adobe, Autodesk, Salesforce, and Veeva Systems, believing that their declines stemmed from panic selling rather than deteriorating fundamentals.

Shorting AI beneficiaries and longing AI "victims" has become Burry's current contrarian hedge portfolio, positioned against the prevailing market trade.

Tradingkey suggests that the significance of this signal may not lie in predicting when the "AI bubble will burst," but in reminding the market that when valuations are extremely inflated and narratives are completely detached from fundamentals, the existence of contrarian trading behavior is itself a persistent warning.